“[Conversely] the increase in gold prices will be considered as a positive sign and the confidence of the customer in gold will increase substantially. Moreover, the wedding season is fast approaching and no matter what the price of gold, demand will soar. No father compromises anything on the day of his daughter’s wedding and gold being a key component will continue to play a key role.”

It then stands to reason that if there is a slump in demand for gold jewellery within India as a result of the higher showroom prices, it will be compensated by that demand getting diverted to other markets within a few flight hours. It places the gold trade in Dubai and the GCC at an advantage. Particularly, when the peak demand season – all through the fourth quarter – for Indian gold buying is just about to get into its stride.

There are many versions as to why Indian authorities decided to hike the import duty on jewellery on Tuesday. According to market sources, jewellers in India were sourcing jewellery from markets such as Malaysia to compensate for the scarcity of the metal in recent weeks. This, in turn, was completely at odds with what the authorities were trying to achieve on the country’s gold bills.

What does this mean for the average Indian consumer? “The increase in gold import duty will have a direct implication on the price of the metal in the local market,” said Ahmad. “However this will not curb the demand for gold because it is not just a metal but part of Indian heritage and culture and, more importantly, a belief.

What this does, as well as the earlier duty increases, is widen the gap between the retail cost of jewellery in the UAE/GCC and what one has to pay for the same in India. Factor in a still weak rupee against the dollar – and by extension the dirham – and the gains multiply for an Indian buying jewellery from here. (In Dubai, a gram of 22K gold was quoting at Dh148.5 (Rs2,552.71) at the opening of trade on Wednesday, while in India it was Rs2,725 a gram. For the record, gold values have dropped more than 20 per cent in the year to date.)

Dubai: India’s financial tsars are bent on doing the UAE’s gold and jewellery trade favours. In the latest turn, they have raised import duties that retailers in India have to pay from 10 per cent to an even more substantial 15 per cent. (The import duty on bullion remains at 10 per cent)